Is the stock market going to tank?

[4matic]

I have been following this thread for... a long time and I find it damn interesting. Not that I have vested interests but the whole geopolitics thingy..
So if you dont mind, 4Matic and others, might I throw some questions?

Ok.

- Stock market, especially the US is way,way overvalued? Some eurobankers say it is about 20-30% overvalued.
Or is it so that it is the only actual thing that is puffing? And is it only because the low interests/loans?

- Oil. How long will US watch saudis dicking around? Their relationship since OBL has been at least strained, some would say necrotic.
What could the possible repercussions be? Some parts of saudi family apparently have been supporting/growing ISIS and the old Bush era
connections have gone sour. US will prolly do nothing to destabilize The Kingdom..or? Setting free 7+ million of pissed of young men with no
clear agenda..well...you get the point.

- What other "black swans" have you coined up to tip things into a double recession?

Stock market valuation has to be a personal opinion. How much of SP500 earnings are engineered through buybacks and cost cutting? Here's a good recent article with various arguments to consider:

http://www.bloomberg.com/news/2014-1...priced-in.html

“You can’t do a whole lot more cost cutting and you can’t buy back a whole lot more stock,” David Lafferty, the chief market strategist for Natixis Global Asset Management in Boston, said by phone. His firm manages about $930 billion. “The big disconnect where companies have been able to grow their earnings significantly faster than top-line revenue growth is coming to an end.”

Imo, a stronger economy will be bad for stocks because companies will have to raise wages and stop cost cutting to compete. Top line growth is going to get harder to come by. Euro's have always put a lower multiple on equities so the overvalued comments just reflect that opinion.

Saudi's are just another corporation competing for market share. I'm not worried about politics as they can deficit spend just like we do.

No US recession in sight. Not a chance. Market Black swans: Junk bonds collapse from illiquidity on oil patch defaults. Imo, bond market liquidity is the number one risk to capital markets http://www.bloomberg.com/news/2014-1...nd-market.html. Currency war heats up (remember, the collapse in oil was preceded by a big move in the US dollar). Another fast move up in the dollar and it will start to affect corporate earnings estimates and more importantly, top line growth (If this happens there will be good value in Euro multinationals).

[Benny Profane]

“You can’t do a whole lot more cost cutting and you can’t buy back a whole lot more stock,” David Lafferty, the chief market strategist for Natixis Global Asset Management in Boston, said by phone. .

Hey, dumbass, check the price of crude on your screen and think about that gift from above as per "cost cutting". Name me a major corporation that doesn't factor in energy costs to the bottom line. Shit, the big guys hedge a lot. Then consider all of your consumers suddenly having 50-100 bucks in their wallet they didn't have in September.

[Bromontana]

- Oil. How long will US watch saudis dicking around? Their relationship since OBL has been at least strained, some would say necrotic.
What could the possible repercussions be? Some parts of saudi family apparently have been supporting/growing ISIS and the old Bush era
connections have gone sour. US will prolly do nothing to destabilize The Kingdom..or? Setting free 7+ million of pissed of young men with no
clear agenda..well...you get the point.

They will dick us around as long as they like, it's their product and they're free to sell the volume they please at the price that suits them. US would not destabilize the Kingdom, stability there is paramount.

Black swans? Defaults and linked derivatives (Venezuela could go under). Russia being desperate and doing something drastic to improve its finances or political grip.

[yeahman]

There will certainly be a thinning of the herd with non-traditional producers, though I doubt many of them look at this dip as a good thing long term.

I agree that they don't view it that way now, but I think they will come to realize that they actually owe the Saudis a debt of gratitude for helping head off development of shale oil plays all over the world. That glut would have truly killed the U.S. producers in the Bakken, as opposed to what's happening now, which I think they can withstand.

If oil is trading at $55 or $60 six months from now on June 1 (after all the hoopla has settled, including dips into the $30s or $40s), I think the U.S. producers in the Bakken will be glad to have it. And because they are already established there and are becoming more and more efficient (now drilling 4 or 8 or even 16 wells from one pad in some cases), I think they will be able to profit from it at that price. Especially with the technology they are developing (practically daily) to eek more recoverable oil out of each well. If they can even raise that a few percentage points--and they will--that's huge. Raising the amount of recoverable oil from each well is key for them right now.

Okay, enough talking out my ass. Only time will tell.

[4matic]

US dollar making a huge move today. Near 10 year high.

[Benny Profane]

Go, baby, go. Benny wants to spend a month in Italy in the fall.

[Bromontana]

$SCO up 4%, producers are doing well and continuing to stay about 20% off a crude coupling. It does not make sense.

[Toadman]

Go, baby, go. Benny wants to spend a month in Italy in the fall.

Well this dude IS spending 10 days in the Arlberg in 2 weeks. So that fiat USD better kick some Eurotrash A$$, and right pronto, nicht wahr?

[4matic]

Russia, Iraq Supply Most Oil in Decades as 2015 Begins With Glut

http://www.bloomberg.com/news/2015-0...with-glut.html

[Benny Profane]

Well this dude IS spending 10 days in the Arlberg in 2 weeks. So that fiat USD better kick some Eurotrash A$$, and right pronto, nicht wahr?

One wonders if using dollars will get you a better deal soon.

[Toadman]

One wonders if using dollars will get you a better deal soon.

One never knows. Buenos Aries 6 years ago, merchant eyes would light up at the mention of USD's. Greece will prob. be same way in a few months. No good mtns to ski in Greece though....

[4matic]

Oil getting smashed tonight, $51.50 Dollar soared on stop loss selling. Euro/usd hit 118 to a nine year low.

[Bromontana]

Recent reading tells me the following:

- While Saudi production costs are low, their budget deficits are not popular within the royal fam. Not exactly news but it's important to note they incur deficit spending and are not going to tolerate a decade of unnecessary deficit spending to maintain market share they can simply gain back at higher prices (ex. $70/bbl target)

- The lower prices go the bigger downstream impact on production. Maybe this is the Saudi plan. It makes sense. Depress prices enough by ignoring a bear market to the point where you incur long term economic damage on the non-traditional producers (yeahman - this kind of touches on your prior point). OPEC could increase supply to offset a dramatic dropoff in non-traditional production.. effective market share gain as long as they can properly manage the market (this requires them regaining their old position as swing producer).

All said the bounce back in $/bbl could be volatile and sustained if rebound doesn't occur in the next 12 months. If it comes before then, then yield is achieved earlier. Either way you slice it the trade seems to have a better upside the longer it takes to move. A lot of negative feedbacks are kicking in now and even more will as the suppressed prices continue. Finding it hard to buy into the narrative of a 10yr suppression in prices below $80.

[huckbucket]

Finding it hard to buy into the narrative of a 10yr suppression in prices below $80.

As you know, I'm in agreement. I just don't see how Russia let's it happen either.

[4matic]

Let's suppose you get a $10 rally in crude oil and .30c in gasoline. I suspect there's a lot of hedging to be done at higher prices. Hope can't be a strategy and producers are going to try and fix costs higher. Bearish. Looking for acceleration down.

[huckbucket]

Let's suppose you get a $10 rally in crude oil and .30c in gasoline. I suspect there's a lot of hedging to be done at higher prices. Hope can't be a strategy and producers are going to try and fix costs higher. Bearish. Looking for acceleration down.

I think our timelines are very different, mostly born of that fact that I can't read short term stock trends to save my life.

[strawjack]

Of all you guys posting in this thread, does anyone actually do some sort of investment job for a living?

[Benny Profane]

If you mean not working and living off of your investments, yes.

[4matic]

Of all you guys posting in this thread, does anyone actually do some sort of investment job for a living?

Real time news and information. Pricing reference.

Bitcoin getting blown up. Down 30%.

[strawjack]

So Benny, you would need what, at least 250k in investments to get by without working huh? And that would be on a good year. I would think at least 500k to do it consistently and build upon that. Do tell.

[Benny Profane]

I think a million and a half, if you want to enjoy life. Unfortunately. That includes a pension, which I look at as an annuity I paid for with hard work.

[4matic]

10y Note: 2.04%. Looks like 1.60% to me.

WTI trying to hold $50. No bounce off the lows.

[Benny Profane]

Euro is going down in lockstep with oil.

[strawjack]

I think a million and a half, if you want to enjoy life. Unfortunately. That includes a pension, which I look at as an annuity I paid for with hard work.

Yeah, that would make sense. I was talking dirt bag style, so I think I could do it with 3/4 assuming modest returns and work a chill part time job.

I need to diversify my portfolio. Most everything I have is in a Index mutual and ETF. Last year was good, but it seems like it can't last.

[Benny Profane]

I fear the Grexit.